Re-Launching An American Industry is Hard But Vital. Non-Whiners Preferred.
Federally Legal Research Revenue is Flowing and Growth is in the Double Digits. Can the Hemp Industry Take It To the Next Level?
By Doug Fine
When you go from consumer to producer (of anything), your units of measure change. I spent much of the past three years investigating the reemergence of hemp agriculture from Oregon to Slovenia.
But in 2016, I became a hemp farmer too.
Which meant my shopping list grew from sixteen ounce bottles of Nutiva hemp seed oil to rodent-proof storage bins for two tons of hemp seeds.
Even with my family’s considerable Omega needs, that’s an amount I would be hard pressed to argue was for personal consumption.
All because, alongside 816 other permitted American farmer/entrepreneurs in 15 states (and counting), I’m trying to help birth an independent agricultural resurgence in the Digital Age. And I’m doing this not while clutching a warm latte in a boardroom, but by processing hemp in an icy Vermont maple sugar shack.
This is a hemp crop planted from seed back in the innocent Spring of 2016. (The first press of the resulting product, by the way, is a delightful muscle, skin and massage oil called Hemp in Hemp, and it’s available here.)
Here’s the real reason why I gratefully shiver in the sugar shack: the petrochemical era is winding down. It worked for a little while, if you don’t count a planet half-poisoned. But when the dinosaur juice no longer flows in viable quantities, we do have a shot at keeping the digital good life going. Visualize plants, fungi and algae providing everything from aerospace parts to car batteries. Actually you don’t have to visualize: It’s already happening.
To demonstrate this near-future industrial revolution, I travel everywhere with a plastic goat, 3D printed in Colorado from hemp grown 25 miles away. If you come see me at a live event, you’ll meet the goat.
In hemp’s fiber lies our next-generation bio-composites and bioreactor feedstock—plus our roads, solar collectors and books. And as demand grows for all of hemp’s applications (nutraceuticals is a major space at the moment), each acre planted to power this new bio-based economy will remove carbon from the atmosphere.
How? By building healthy soil, perhaps our highest impact single tool for environmental remediation and climate mitigation.
There is, of course, one little step before hemp and other bio-materials buy humanity a couple of centuries to completely work regenerative practices into the economy’s fabric. That step is creating an industry.
It’s not easy, but it’s happening anyway.
After a 77-year break, the hemp industry resurgence became possible thanks to Section 7606 of the 2014 Farm Bill, 329 beautiful words that removed cannabis with less than .3% THC from the Controlled Substances Act (CSA) for farmers conducting research (including marketing research) as part of state hemp programs.
On the ground in 2016, what we earned with that legislation was, start to finish, a high level Ninja Training seminar called “Launching an Industry In An Unfriendly Business Climate.” For me, just making it to the frozen-fingers-in-the-maple-shack phase feels like one of those accomplishments I’ll someday relate to the grandchildren.
First off, I had to cultivate in Vermont because my own governor vetoed New Mexico’s bi-partisan hemp bill in 2015 (and again last week), thus pushing this erstwhile regenerative entrepreneur 2,500 miles east.
And I’m not the only one. Iginia Boccalandro’s Fat Pig Society Co-op in Fort Collins, CO, grew a $300,000 crop in its debut season. “I’d love to still be [home] in New Mexico,” she told me. Instead, she and I are building the hemp industry elsewhere, for now.
Significant Growth Despite Hurdles
Given the potential benefits to soil and economy, the modern hemp industry’s early players stood ready to weather mother nature’s whims, the evolving-by-the-week patchwork of interim state and federal legislation that allows our existence, and—perhaps most threatening—the ravenous appetite of birds for Omega-rich hemp seeds as they mature on the vine. (I spent a fair part of the 2016 season yelling at finches.)
Yes, those of us with multi-year game plans, at least, could handle these hurdles. We got our crops planted. We got the harvest in – nearly four thousand pounds of seed in our case. (In the course of which I did something I never imagined I would: I learned how to drive a tractor.) We were working on preparing the resulting healthy products for folks. The collective mood could be described as “phew.”
Then, on December 14, our public servants in the Drug Enforcement Administration (DEA)’s administrative echelons published a rule change surrounding non-psychoactive cannabis extracts. Several of my colleagues called me, rattled, and one big cultivator confessed in social media to being “terrified.”
This category shuffle was evidently in the bureaucratic pipeline for five years. It was a rule notice published in the Federal Register that established a Schedule One CSA code for cannabis plant extracts. The problem with that action, according to Michael Bowman, board chair of the National hemp Association, is that the non-THC parts of the burgeoning cannabinoid industry (including CBD, CBC, CBG and CBN) were legalized in that 2014 Farm Bill provision.
“The whole of the hemp plant is legal under [the Farm Bill],” he said.
Now, few of the dozens of hemp farmers with whom I regularly interact are crazy enough to imagine that a soil-healing, economy-building, tax-base-strengthening new industry, already growing by double digits and creating hundreds of lucrative jobs, might actually be assisted by one’s governmental agencies. At least not until we’re the ones buying policy. We just thought we were demonstrating that our rule-following asses were worth leaving alone. The hemp farmers with whom I hang are serious about making all efforts to comply with federal and state law.
Bob Hoban, Managing Partner at the Hoban Group, the nation’s largest cannabis-focused law firm, notes that, “when it comes to the cannabis plant, the facts seem not to matter.” His firm, alongside the Hemp Industries Association trade group (HIA), has filed a federal lawsuit against the classification. “This action is not only wrong, it has strong potential to negatively impact hemp farmers and processors who are trying to make a legal living in the real world,” Hoban said.
There’s a lot riding on this, speaking for the families in our Vermont group, called The Family Green. Like, ya know, much of our collective savings. The whole situation spurred a few “maybe we should hold off on the crinkly foil for the top of our debut product” conversations.
Indeed, the news was jolting. Fear was not an emotion I expected to feel as a hemp farmer. My youngest son spent his sixth birthday helping with the Vermont planting. It was a literal field trip. He learned about planting depth and germination.
We’ll all remember where we were when that rule change hit our screens – I was north of Spokane, Washington, helping the Colville Tribes GPS 2017 hemp field locations.
Prior to December 14, most U.S. hemp farmers I knew felt the legislative battles were over. Heck, in a 2013 New York Times article, a DEA spokesman said, “Hemp farmers are not on our radar.”
“Farmers want it,” was how Congressman James Comer (R-KY) put it when we spoke at a congressional hemp summit last February.
“It’s insane that I can buy hemp seed in Costco but farmers can’t commercially grow it here,” Senator Ron Wyden (D-OR) said at the same event.
Up in Vermont, we fully believe federal law allows our cultivation and marketing of hemp, so long as it’s part of research associated with a state agricultural hemp program or university. Ours is both. We feel, or should feel, safe.
Within 48 hours of the DEA rule change listing, Eric Steenstra, then-Executive Director of the DC-based HIA, sent off a note to the organization’s 500 members that the rule “did not change the status of CBD” and the organization “is ready to take action to defend should DEA take any action to block the production, processing or sale of hemp.” (Steenstra is now Executive Director of the VoteHemp non-profit advocacy group. Full Disclosure: I am a member of both organizations.)
My colleague Rick Trojan, a fellow who (I love this story) read my book Hemp Bound in 2014 and two years later planted 2,500 acres with his Colorado Cultivars operation—only some of which was destroyed by freak hail—said, “we’re watching the new administration’s policy but we are not changing our game plan one bit from the one we had the day before the DEA’s rule change.”
Know who else isn’t? Wal-Mart, evidently, where as of this writing you can buy all kinds of healthy CBD products.
Shivering back in in the Green Mountain State, we’re not deterred either. This is a moral issue for the members of The Family Green. One of my farming partners, Robin Alberti, finances her share of our endeavor by waitressing, and says she explicitly turned to hemp “so my kids will have a way to stay in this beautiful area.”
As a group of farmers and entrepreneurs, we’re trying to figure out how to make the economics work with a soil-enhancing, locavore business. As a result, our mission statement reads:
The members aim to cooperatively produce healthy products (for their own families and communities, and for more than just humans) that benefit the local economy and soil (including the farming economy) by promoting a regional and sustainable industrial loop. Therein the members hope to provide a regenerative planet-wide economic model that might help heal soil, mitigate climate change and make room for healthy, affluent rural communities to lead the world toward long-term peace.
And that’s why you find us processing in a maple syrup shack, passionately trying to produce healthy products, starting with both seed protein meal for animals and our value-added muscle, skin and bath oil, and then, next year, adding hemp superfoods.
But the moral imperative isn’t the only reason I’m, personally, working so hard on this Vermont project, and on all my hemp endeavors around the world. We must succeed because the old agriculture economy is collapsing. Our third Vermont farming family last season, the Williamsons, make almost no money on their existing hay business.
“It’s hardly worth it to plant,” John Williamson told me.
In hemp, close to a thousand Americans to date see an opportunity for farmers worldwide to enjoy economic prosperity in the Digital Age. Bowman envisions this coming in the form of an updated Homesteading Act, providing incentives for cultivators, processors and marketers of regenerative crops like hemp.
One way this might work would be through baseline soil testing: rebates, credits or subsidies for every inch of healthy polyculture soil created. However it evolves, soon enough the official U.S. governmental policy on every level toward hemp will be “how can we thank you for putting farmers back to work and healing the soil in the process?”
Meanwhile, am I actually writing that hassling hemp is still policy? Let’s look at the merits of these administrative shenanigans. Even if you’re one of those folks who is still afraid of THC, on the same day that DEA announced the rule change, a National Institutes of Health-funded survey reported that youth cannabis use rates declined for the third consecutive year, which the survey’s director called “encouraging and important.”
Which is great. It means our genuinely hard-working DEA field agents need not be bored: pharmaceutical abuse and heroin epidemics are rampant. Nearly 34,000 people died from prescription opiates in 2015, according to the Centers for Disease Control. That’s just under four per hour. One since you’ve starting reading this dispatch.
Already hemp’s bi-partisan friends in Congress are thinking beyond current research provisions. Representative Thomas Massie (R-KY) asked me in the first minute of our first meeting, “Do we need to raise the federal definition of hemp to 1% THC?”
(Yes, as a start, and Tasmania and Thailand have already done this – it’s important because the arbitrary .3% THC level for hemp caused 28% of Colorado farmers to test “hot” in 2016. This included, within the margin of error of some machinery, good friends of mine on the Western Slope — a couple with two kids — who had just invested in a combine for a crop they wound up not being able to harvest. This cannot be tolerated.)
“Hemp is no longer controversial,” said Steenstra of the plant’s support in Congress.
“We have the floor votes to pass full commercial hemp,” Representative Jared Polis (D-CO) said last week.
And so it was with the weary sigh of the from-the-field Drug War correspondent who has seen this part of the cycle a few times already that I told my Vermont partners what comes next: probably via rider, Congress will get more explicit in hemp-protecting wording. This will plug the latest gaps that a bureaucratic entity, aiming to preserve its budget contrary to the well-being of the people it exists to serve, claims. All while we wait for the inevitable full commercial legalization to put the issue to rest.
Trojan believes that the opposition’s bureaucratic mindset is both its weapon and its weakness. “They’re shooting themselves in the foot with delay tactics that are contrary to law and public opinion.”
This is a tough thing to explain to a Vermont farmer with a mortgage, an ’86 John Deere harvester in the field, and a slightly newer pick-up truck on the blink. “Oh, it’s Newtonian, John,” I told Williamson, surrounded by a lot of hemp and maple syrup. “The bureaucrats act, our allies react. It helps us in the long run.”
To his credit, Williamson said he was “not losing any sleep” over this latest mining of the harbor by the retreating Drug Warriors.
Thomas Jefferson Sleeps Better Now
I and the team were borderline hypothermic (and also slightly euphoric) as we donned aprons and set to work on making a batch of Hemp in Hemp, our sun-grown, farm-pressed Vermont hemp seed oil, infused with the flowers from the same harvest. Sure smells terpene-licious. Smells like victory.
And we in the Family Green are not alone in feeling overall like a success: 9,650 aces of Thomas Jefferson’s favorite crop got cultivated in 2016, up from zero in 2012, according to the HIA.
The value of this domestic crop is difficult to assess, because the market is so new. But the North American industry crossed the half billion-dollar level last year, according to the HIA, and the CBD side of the U.S. market alone was worth $115 million, according to the Hemp Business Journal.
This is a tremendous achievement, for any new industry. Remember, three years ago, no hemp was legally cultivated in the United States. In 2016, 5,800 outdoor acres were planted in the Rocky Mountain State alone, more than the previous year’s total national acreage. One of those contributing entities is Boulder, Colorado’s EvoHemp, which moved one million all-organic nutrition bars last year, and is sourcing domestically this year. Kentucky’s industry has grown 7,000% since 2014 – it’s slated to triple again in 2017.
And that’s with 99.5% of American homes as yet having no hemp products in them, according to a recent Canadian study. In other words, we’re nowhere near market saturation for any part of the plant (fiber, seed or flower).
Our Family Green Vermont project–which incidentally dry-cropped and thus used no irrigation water—has already produced a couple of tons of hemp, created two jobs and sequestered close to 7 tons of carbon (depending how one measures it). We officially contributed 23 acres to that national total, but really more like 12-and-a-half acres, after accounting for clogged combines, routine millennial climate events, and about six different field robberies.
“Now you know what it takes to be an entrepreneur,” Thornton Melon would say in Back to School. No point whining. And at least I don’t have to buy expensive hemp hearts for the morning yogurt any more: I grow them now.
For all the dramatic twists 2016 provided, the legal hemp industry, is undeniably off to an incredible start. This despite all the immersion therapy techniques employed by the universe’s Ninja Trainers.
Indeed if you take one thing from this dispatch, I hope it’s this: American hemp is exceeding the most optimistic predictions of three years ago, largely because all the existing offshore prognosticators (as I predicted they would in Hemp Bound) have underestimated the bottom-line value of the American go-get-’em spirit.
We don’t care that 90% of new businesses of any kind fail. We’ve been waiting for this moment for much of our lives. Hemp cultivation is legal again, and we believe that this plant will play an integral role in the survival of our species.
If I were to assess the biggest challenge for the industry, it would have nothing to do with the Drug War’s final battles. It would rather be the challenges of scaling up. First off, there’s the essential issue of steady supply.
“What hurt hemp in its last resurgence, in the 1990s, was that when a product got popular, there often wasn’t enough hemp to support the growth,” says Edgar Winters, an Oregon hemp farmer who first cultivated hemp in Alabama in 1957 (his grandfather rightly believed hemp twine outperformed the new synthetic hay baling twine that to this day pollutes our range lands).
Can we match demand this time around? Rick Trojan thinks so. Colorado Cultivars is expanding from 2,500 acres to 5,000 in 2017, mirroring nationwide industry growth. He ain’t blinking.
We’re not either. And we’re not talking about any old kind of growth. For dozens of the early players in the modern hemp industry, the regenerative growth that benefits (for once) the farmer, is key. The business term for this is vertical integration: the producer shares fully in the final product’s value.
That’s why Boccalandro’s Fat Pig Society operates as a co-op that spreads all final product revenue back to the farmers who grew the plants. “We’d rather see 1,000 farmers growing 10 acres than one farmer growing 10,000 acres.”
So thanks for helping us build this market. I’d like to suggest that we work to get hemp’s market penetration up to 7% by this time next year, so that the percentage of Americans who are farmers increases from today’s 1% back at least to the 30% at cannabis Prohibition’s inception, if not the 90% in Tom Jefferson’s day. Because with more soil caretakers, we have a shot at mitigating climate change. I call that fighting for my family’s survival. That’s why I grow hemp.
A version of this essay first appeared in High Times Magazine. Please feel free to forward this Dispatch widely.